Some Finer Points Regarding Trade Secret Law (No. 2)

An invention held by an inventor as a trade secret can, under certain circumstances, prevent the inventor from later patenting the invention.

Under §102(b) of the U.S. patent laws, there are several distinct bars to patentability that relate to activity or disclosure more than one year prior to the date of an application (the “critical date”). One such bar is known as “public use.” Another is known as the “on-sale” bar. See MPEP 2133.03. Thus, a person is entitled to a patent unless the invention was in public use or on sale in the U.S. more than one year prior to the date of application.

First, and most obvious, the display or sale of a “trade secret” invention is considered to be a public use. This holds true even if the trade secret invention is hidden as a component of a larger machine or article. SeeMPEP 2133.03(a). Thus, display or sale of a trade secret invention (whether the trade secret is apparent or not) acts as a bar if the application for patent is filed after the critical date.

Second, and I think the more interesting scenario, a secret process used to produce a commercialized product can bar patentability of the process. For instance, a secret process used to make a product is “public” if the details of the process are ascertainable by inspection or analysis (reverse-engineering) of the product that is sold or displayed. SeeMPEP 2133.03(a)(II)(C).

But Jake, you might say, what if the process cannot be reverse-engineered from the product? Is it in public use even though the trade secret process itself is not being sold and (in typical manufacturing settings, at least) is not accessible to the public? Well, for some important policy reasons stated herein, the courts have held that practice of such a trade secret process is also “public use” under the meaning of §102(b).

A recent case highlighting this point was Invitrogen Corp. v. Biocrest Manufacturing, L.P., et al. (04-1273, Fed. Cir. 2005). In this case, the issue was whether a patented process claim was invalid under the public use bar of §102(b), where no product produced thereby was commercially exploited? The patented Invitrogen process was secretly used for development purposes more than one year prior to the critical date, but was not used to produce commercialized products. In reversing a finding of invalidity, the CAFC reiterated the following standard:

[I]t is a condition upon an inventor’s right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy or [a patent]. (Emphasis added).

It should be noted that the CAFC also articulated an important exception to this standard. A trade secret process will not be deemed “publicly used” where there is no commercial exploitation. In this case, the fact that Invitrogen secretly used the patented process but did not sell products made with the process meant that there was no public use bar to patentability. Use of the trade secret process to develop future products internally did not rise to the level of “commercial exploitation.”

As stated above, public policy dictates these standards. The purpose of the public use and on-sale bars is to encourage prompt or timely disclosure of new inventions to the public via patents. Also, an inventor should not be allowed to exploit the exclusivity or monopoly granted for a patented invention substantially beyond the period authorized by statute.

Accordingly, if a product produced by a trade secret process is commercially exploited (e.g. given or sold to another), the trade secret process is deemed “publicly used” within the meaning of §102(b) and cannot be patented once the critical date has passed.